Dynamic consistency of insurance contracts under enforcement by exclusion

DOI10.1016/0165-1889(89)90013-4MaRDI QIDQ1109667zbMATH OpenOpenAlexFDO

Authors Bart Taub

Publication date 1989

Published in Journal of Economic Dynamics and Control (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0165-1889(89)90013-4

zbMATH Keywords

dynamic consistencyindividual income shocksinsurance contracts

Mathematics Subject Classification ID

Economic growth models (91B62)

Review text

An insurance institution offsets individual income shocks with a contract that takes advantage of the cross-sectional heterogeneity of the shocks. Individuals with temporarily high incomes will wish to avoid the redistributive taxes imposed by the contract; these individuals are permitted to defect, but at the cost of forsaking all future benefits. Operator methods like those used by \textit{Ch. Whiteman} [ibid. 9, 225-240 (1985; Zbl 0655.90012)] characterize the conditions under which on defection will occur. If the contract is identified with redistributive government programs, the central conclusion is that such contracts will be associated with high-income, advanced economies.

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Cites work

• Equilibrium solutions in dynamic dominant-player models
• scientific article; zbMATH DE number 4054857 (Why is no real title available?)
• scientific article; zbMATH DE number 3807307 (Why is no real title available?)
• scientific article; zbMATH DE number 3244325 (Why is no real title available?)
• Repeated insurance contracts and moral hazard
• Spectral utility, Wiener-Hopf techniques, and rational expectations
• The law of large numbers with a continuum of i.i.d. random variables

Cited in

(2)

• Aggregate fluctuations, interest rates, and repeated insurance under private information
• Aggregate fluctuations, interest rates, and repeated insurance under private information

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